Change of the Decision About the Level of the Remuneration on the Amounts Above the Required Reserve

Based on the Decision of the Governing Board of the Central Bank of BH (CBBH), the level of the remuneration, which the CBBH pays to the commercial banks on the amount exceeding the Required Reserves level, will change as of January 1, 2004.

According to the Decision on the setting and maintenance of the Required Reserve and on the determining the remuneration on the reserve amount, which became effective on June 1, 2003, the CBBH pays remuneration on the total amount of funds of banks deposited on the reserve account over the settlement period. This means that the same remuneration is paid both, on the assets that the banks are obliged to keep on the reserve account, as well as on the assets exceeding the required amount.

After the implementation of the new Decision, which should become effective as of January 1, 2004, remuneration on the Required Reserve will remain the same, while remuneration on the funds exceeding the Required Reserves level will be calculated and paid in accordance with the rate of the European Central Bank (ECB), by which commercial banks from the euro-zone can deposit excess of assets ("deposit facility" rate). This rate is changeable and is currently one percent.

The main reasons for this new Decision on the level of the remuneration for the funds exceeding the level of the Required Reserves are harmonization of the CBBH regulations with the regulations of the ECB, as well as the eliminating of the negative effects of the previous remuneration policy that led to the unnecessary accumulation of excess reserves.